Forex Blog

USD recovered from its daily minimums against euro after the important fundamental reports were released today in U.S. EUR/USD has been trading with 70 pip gain today, but currently it’s trading near its open rate. Only net foreign purchases and Philadelphia Fed index showed some positive developments for the U.S. economy, while other releases were of a very little help for dollar bulls.

Initial jobless claims remained quite high last week — they rose 6,000 compared to previous week and were at 371,000 — just 1 thousand above the analysts’ expectation.

NY Empire State manufacturing survey index fell down in May from 0.3% to -3.2%. That’s not a big fall, but it’s negative and the markets will react respectively.

Net foreign purchases of the long-term securities were at $80.4 billion in March — above the revised February level ($64.9 billion revised down from $72.5 billion). Forecast for March purchases was at $62.5 billion.

Industrial production and capacity utilization both declined stronger than expected in April. Industrial production dropped 0.7% after growing 0.2% in March and with only 0.3% drop expectation for April. Capacity utilization declined from 80.4% to 79.7%, while the forecast was at 80.2%.

Philadelphia Federal Reserve index rose a bit in May — from -24.9 in April to -15.6 this month. It’s the highest reading of this index (which measures the U.S. business outlook) in five months.

May Day resulted in some unexpectedly bad fundamental data releases from the United States. Labor market, income, spendings, construction and manufacturing were covered in today’s reports and none of them showed something optimistic for the dollar bulls; nevertheless EUR/USD was down today and the dollar managed to show some unfounded strength on the Forex market.

Initial jobless claims rose up from 345k (also revised up from 342k) to 380k last week, showing a further decline in employment.

Personal income rose 0.3% in March, while personal spending was up 0.4%. And, while spending was above the expected 0.2% growth, income growth was below the expectation of 0.4% growth last month.

Construction spending in March decreased faster than the analysts expected — it was down by 1.1% compared to February, while a 0.7% drop was expected.

ISM manufacturing index was reported to be unchanged at 48.6% in April — better than the expected drop to 48.0%.

EUR/USD slid to its minimum value since April 14 today on Forex — 1.5675, as the investors started to consider the U.S. currency to be oversold and the further interest rate cuts by the Federal Reserve — unlikely. Fundamental data that was released today in U.S. was mostly disappointing, but that didn’t help the euro to grow against the dollar.

Initial jobless claims dropped 33k last week — from 375k (revised up from 372k) to 342k, which is below the expected 375k.

Durable goods orders decreased 0.3% in March, while February’s change was revised from -1.5% to -0.9%. The market analysts expected the orders amount not to change in March.

New home sales in United States dropped to 526k in March (annual rate) from 575k in February (revised down from 590k) — below 580k forecast.

EUR/USD reached a new record high level at 1.5913 today, but after some positive fundamental data was released in U.S. the currency pair went down, as the dollar started to regain strength on the Forex market. ECB’s decision to hold the interest rates at 4% also improved dollar’s positions on the market.

Initial jobless claims unexpectedly fell by 53k the last week — from the revised 410k value to 357k. A fall to 383k has been expected by the market analysts.

February U.S. trade balance deficit came out to be far worse than the majority of the investors expected — $62.3 billion, up from January’s $58.2 billion. It was expected to go down to $57.4 billion.

Treasury budget deficit was lower than the expected $70.3 billion value in March. It was $48.1 billion — better than the last year’s $96.3 billion deficit for the same month.

EUR/USD turned to a mainly bearish trend after the GDP and unemployment statistics were released in U.S. today at 8:30 EST. Dollar went up from 1.5845 to 1.5750 dollars per euro.

The gross domestic product in the fourth quarter of 2007 gained 0.6% as was forecasted by the major market analysts and the previous GDP report. While the value is definitely low, it’s still above zero and it also held stable against the expectations of the possible revision.

Initial jobless claims last week decreased slightly — they went down from 375,000 (revised down from 378,000) to 366,000. The consensus expectation was at 371,000.

EUR/USD reversed almost fully its previous weekly earnings today. It fell from 1.5642 to 1.5419 — that’s more than 1.4% in a single day. The euro, being fundamentally overbought, was doomed to a correction. But such a fast drop can mean something more than a short-term correction wave. Though the fundamental data that came out today in U.S. wasn’t very good for dollar.

Initial jobless claims last week increased to 378,000 from the previous week’s 356,000 (revised up from 353,000). The increase to 360,000 has been expected. This indicator is still very bad and is signaling that the employment market in U.S. is still suffering from the financial crisis.

Leading indicators isn’t very important indicator in Forex trading, but it can show the overall health of the economy in U.S. In February leading indicators index fell 0.3% — as expected.

Philadelphia Fed index measures the state of the manufacturing conditions. In March it improved slightly from the record low February’s -24.0 to -17.4. But its value is still very low and indicates the weakness of the manufacturing sector.

EUR/USD reached a new absolute maximum value today not so long after the opening of the European trading session. It touched 1.5626 and then traded slightly below that level. Bad economic news from the U.S. failed to move the currency pair upwards. EUR/USD even started to correct after those releases.

Retail sales in February dropped 0.6%, while the retail sales excluding the motor vehicles and parts dropped 0.2% in the same period. A growth by 0.2% was expected for both of these indicators.

Initial jobless claims in the last week were at 353k — unchanged from the previous weekly report and just a bit lower than the expected 355k value.

Export prices were up by 0.5% in February, while import prices gained 0.6%, losing some of the January’s pace, when they increased 0.8% and 0.7% respectively.

Business inventories in January increased by 0.8% compared with the previous month (inventories gained 0.6% in December 2007). The market analysts expected a 0.5% growth in January.

Today EUR/USD renewed its historical maximum on Forex market again. With almost every day for this currency pair being positive in gain, the question arises — where will it stop? So, where is the medium-term resistance for EUR/USD? Is it 1.5400? 1.5000 was a major psychological barrier; after it was broken recently the EUR/USD has already reached 1.5372. In my opinion, dollar will continue to fall for as long as the Fed will be cutting the interest rates and the ECB will be holding or increasing the rates. It’s possible that the pair will touch 1.5800 until they both stop.

Initial jobless claims report failed to hold EUR/USD from reaching a new maximum; in the past week they were at 351,000, below the previous value (375,000) and the forecasted value (360,000).

Pending Home Sales Index in January remained at the same low level as in December — at 85.9%.

GDP release today in U.S. pushed dollar down after yesterday’s macroeconomic statistics and allowed EUR/USD to reach a new record at 1.5179. Meanwhile GBP/USD decelerated its pace a little and turned to a less bullish trend today.

The preliminary GDP data for the third quarter showed 0.6% growth — the same as it was in the advance release a month ago, but below the expected 0.8%. That’s quite a poor result for the U.S. economy, but still — not a recession.

Initial jobless claims last week were at 373,000 — a very high number even if compared to the previous 354,000. A small decrease to 350,000 was expected by the market strategists.

EUR/USD gained more than 100 pips today on the bad macroeconomic data coming out in U.S. This currency pair went up from 1.4714 at the opening of the Asian trading session to 1.4816 at the end of the New York session. GBP/USD also grew very fast today — from 1.9420 to 1.9622. The major trend movement against the European currency happened after the release of the Philadelphia Fed’s business activity index, which showed a significant worsening of the business markets’ situation in U.S., while some definite improvements were expected. It fell from -20.9 to -24.0 (it was expected to increase to -10.0).

Among other important statistical releases that came out today was the initial jobless claims count for the last week — it dropped down slightly — from 358k to 349k (a drop to 345k was expected by the market traders) .

U.S. commercial crude oil inventories again grew sharply — a gain of more than 4.2 million barrels was registered for the last week. It’s the fifth straight weekly gain and almost every time it was far above 1 million barrels. This helped to keep the oil price below the "sacred" $100 level today.